Mortgage Loan Origination Activities questions I got wrong

Which of the following items would an owner's extended coverage (OEC) title policy cover?

Unrecorded mechanic's liens.

OEC policies typically cover

Most OEC policies cover the owner's for claims made based on unrecorded liens and encumbrances.

Which of the following is true about loan origination systems?

They are used to track loan applications and automate tasks.

Mortgage loan rescission allows a borrower to ______.

Retract the second or restructured mortgage signed for at closing

Which one of the following is NOT classified as a loan origination fee?

Title search fee

What is Owner Extended Coverage (OEC)?

An optional endorsement to a standard owner’s title insurance policy that provides additional protection against unrecorded risks, such as encroachments or survey errors.

What is the difference between OEC and a lender’s title insurance policy?

OEC applies to the owner’s title insurance policy and protects the homeowner, while the lender’s policy only protects the lender’s interest in the property.

Who pays for OEC?

The homeowner typically pays for OEC as a one-time premium at closing.

A loan origination fee is best described as a fee that a lender charges _____.

For processing a loan

Your borrower has to pay a funding fee for her USDA loan. The current amount is set at ______ of the loan balance on an annual basis.

0.35%

To which of the following fees does the 10% tolerance threshold NOT apply?

Origination fees

In a loan transaction involving a mortgage broker, which of the following statements is true?

The lender must provide the LE to the borrowers.

Which one of the following is an example of a prepaid expense item due at closing?

Annual homeowners insurance premium paid through the transaction year

If a title defect occurred prior to the seller’s ownership, then the seller would need to ______.

Contact his title insurance company and file a claim against the title insurance he purchased when he bought the property

MLO Maggie asked her teammate Ken to review her first closing statement. The amount of prepaid mortgage insurance, taxes, and interest appear to be correct. In addition to itemizing what the borrower-paid closing costs are, he should also verify the prepaid section includes ______ for accuracy.

The applicable time period

applicable time period

duration for which certain expenses are paid in advance at closing

Title insurance typically covers events or claims filed on the public record before the title insurance policy’s effective date but excludes

disclosed and undisclosed easements.

Marsha's title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?

Marsha's second mortgage on the property, which was properly recorded in January.

Betty has been struggling to make her mortgage payments for the last three months and is on the verge of losing her house. Which of the following is the greatest consideration for Betty to decide before signing a refinance loan?

The cash needed by closing to complete the refinance

To accept a cash down payment gift from a donor, what will borrowers need to submit during loan origination?

Evidence of the gift fund transfer

The escrow account is used for

current and future property expenses for the life of the loan. The law has allowances to permit fees for services rendered for account management.

The HUD-1 is used for

refinanced loans.

______ obtains a flood certificate on every property, regardless of where it's located.

the lender

The borrower must receive the final LE at least

four business days before closing.

Acceptable donors for a gift down payment

borrower’s fiancé or domestic partner, as well as a relative, spouse, child, or other dependents, or anyone related by blood, marriage, adoption, or legal guardianship.

or simply legally related individuals

no friends, co-workers, etc.

Generally, what’s range can a borrower expect to pay for loan origination fees?

.5% to 3%

What significant change in forms occurred with the Know Before You Owe special initiative?

The disclosure rule replaced four forms with only two disclosure forms: the LE and CD.

Which one of the following is NOT an example of a title defect commonly included in coverage with a lender’s title insurance policy?

Current owner holds title without mortgage loan